M., D. C., and C., D. T. 2001. Pricing Strategies with Network Externalities between 2 Groups of Customers. NTU Management Review, 12 (1): 001-036
Chiang, David, M., Associate Professor of Graduate Institution of Business Administration, National Taiwan University
Teng, David, C., Doctoral Program, Graduate Institution of Business Administration, National Taiwan University
Abstract
Since some searchers proposed that the adoption decision of customers have mutually positive network externalities network externalities that is not always correct, this paper aims to illustrate the impact of overoptimitism on the issue of mutually positive network externalities by offering a model to include two groups of customers, general and special ones, fitting real situations of communication networks.
Our first result shows that if the model does not consider the effect of heterogeneity of two groups of customers, the system owner will set a much higher price and expect to generate huge revenues.
Secondly, the effect of price discriminations between two groups of customers doesn't play any important roles in reducing the overoptimistic expectation of revenues.
Finally, the overoptimistic expectation of revenues is squarely influenced by the number of special customers and linearly influenced by the number of general customers.
Keywords
Network externalities Product utility Pricing strategies